Service Quality and Customer Satisfaction

Running head: SERVICE QUALITY AND CUSTOMER SATISFACTION 1

ServiceQuality and Customer Satisfaction

November8, 2014.

Servicequality and customer satisfaction

Customerservice is an increasing area of concern by modern organizationacross the globe. Business organizations sole objective is profitmaximization and minimization of costs. In order to achieve profitmaximization the focus is laid on increasing sales volumes andproduction costs minimization. One strategy that is used to increasesales volume is through customer satisfaction since customersatisfaction leads to customer’s loyalty, recommendation andreference marketing. Focus on consumers became an important are ofconcern during the marketing era in the 1950 when businessorganizations discovered the need to maximize sales throughsatisfying consumers’ needs and interests. As such, besides sellingand production organizations discovered that they could offer moreservice to the customers as a way of enhancing customer loyalty,increase marketing and repeat purchase. The underlying questions incustomer satisfaction are what services are provided to customers?Are customers satisfied with the services? Therefore, this study isinformed by the need that customer services are key for successfulbusiness.

Importanceof customer satisfaction and service quality

Fromthe perspective of organization operation management, customer playsan essential role for the organization processes.Customers are the priority for any organization management’sstructure is put in place. This is informed by the basic question ofwho is intended to consume organization products or services, wherethey are, how the customers can be reached and how customersatisfaction will be enhanced. These questions form the basis throughwhich the business management designs products and services to suitthe customers’ needs. In a competitive business environment in theworld today, effective customer satisfaction is a competitiveadvantage that any business uses to have an edge among thecompotators. Effective customer relationship means delivering qualityvalue that satisfies consumers’ needs than the competitors in themarket. Customers’ feedbacks are integral in giving feedbackcustomer satisfaction (Kotler &amp Keller.2009). Most businessorganization has shifted focus to enhancing products quality as wellas their marketing strategies. This is driven by existing proof that,‘qualityis directly linked to positive product performance and customers’satisfaction (Kotler &amp Keller.2009). Organization thatconsistently satisfies customers enjoys customer loyalty, higherretention levels and great profits. Therefore, to get this customerloyalty companies must enhance good customer service brand toinfluence consumers’ perceptions and attitudes on different brandscompeting.

  1. Statement of the Problem

Privatizationand liberalization policy has expanded in the telecommunicationsector across the globe. Increased mobility and evolving businessactivities in Bangladesh has enhanced the need for communication.Bangladesh country is characterized by tough land terrain whichinhibits effective mobility, and this has made cell phonecommunication an important asset in facilitating business operationsin rural areas. Consequently, cell phone communication rosesignificantly, and Bangladesh become one of the leading cell phoneusers in the globe. This ushered in several mobile telephone companyservices in the market providing a wide range of customer services.The escalation in competition in mobile telephone companies hascreated the necessity for effective customer service quality,customer satisfaction and brand image. Because customer satisfactionis the main object of most business in the contemporary world,research on service quality and customer satisfaction will always bea topic of research.

Inthe same line because of the problem of satisfaction unpredictabilityby customers in business and because satisfaction changes, and variesbetween individual customers to the best research on this area isimportant. However, other factors such as price, product qualityfactors also determine customer satisfaction other than servicequality(Schiffman &amp Karun, 2004).Despite this fact, the interest of this study will focus on theservice quality as proved to be the most determining factor incustomer satisfaction in the service sectors. Similarly, qualitycustomers’ service is the main focus for most organizationmanagement strategies for enhancing customer satisfaction in acompetitive business environment today (Kotler&amp Keller, 2009).

Additionally,past studies indicate salient gap between service quality, brandimage and customer satisfaction in the telecommunication industry inBangladesh. Fundamentally, there exists less empirical research inthe area of service quality and customer satisfaction. This researchaims at assessing the level of customer satisfaction and servicequality perception in the telecommunication industry in Bangladesh.The research paper will explore service quality and customersatisfaction variables in an attempt to understand thedecisive factors of affecting customers’ perception in Telecomindustry in Bangladesh.The findings of the study will form basis future studies.

Purposeof the research

Thesole objective of this research is to assess the link betweencustomer service satisfaction and service quality in thetelecommunication industry in Bangladesh with respect to servicequality.

II.Background Literature Related to the Problem

Mobiletelecommunication firms play an essential role in enhancing socialinteractions among individuals, groups, organizations and thegovernments. This has enhanced a strong network in the globalenvironment.

CustomerSatisfaction

Customersatisfaction is a term used to refer the contentment derived by acustomer when needs and wants have been met by the business. However,customer satisfaction also insinuates the feelings of pleasure ordisappointment towards product or service in comparison to thecustomer expectation (Kotler &amp Keller, 2009). Customersatisfaction varies from one customer to the other in relation toutility service expectations. Organizations derive satisfaction aftermaking clients happy with products of services. Several authors havedefined customer satisfaction in different ways some define it inrelation to cognitive or affection attached towards particularexperience.

However,the most astute definition of customer satisfaction is the level atwhich company products or services performance matches customers’expectations (Kotler &amp Kotler, 2009). Schiffman &amp Karun(2004) defined customer satisfaction as individual perception ofproducts of products or services in comparison to expectations.Assessing customer satisfaction is thus not easy since it is based onindividual feelings in relation to needs. Customer satisfaction canbe measured through quality service, speed of service, pricing,complaints and the closeness of the relationship developed withclients. In addition, customer service can be assessed on transactionbased criteria or cumulative criteria. In this case, customer’spost-transaction behaviors are assessed, or cumulative productpurchases by customers can be used assess the level of satisfaction.Therefore, it can be hypothesized that customer satisfaction hassignificant influence on consumers’ choice of mobiletelecommunication provider.

Servicequality

Inthe business world consumers’ preference to shop in a particularbusiness for products and services is driven by quality. Quality isthe ability to satisfy the total characteristic and features of aproduct or services in accordance to clients’ needs. Severalstudies have been conducted in regard to perceived quality servicesby clients. As such, quality is related the offer value that evokedissatisfaction or satisfaction by the user. Therefore, servicequality refers to the level of perceived service to service offered.The sole objective of giving quality services to consumers is toenhance customer satisfaction. Quality service is a mixture of threeIntegra aspects ‘processes, procedures and physical facilities,’personal behavior of the servicer and professionalisms of the staff.

Accordingto Zeithaml et al. (2006), quality service is refined under fivedimensions (SERVQUAL) tangibility, reliability, responsiveness,empathy and assurance. Tangibility refers to the appearance of thestaff, facilities or equipment where services are received.Reliability is the capacity to perform expected services accuratelyand dependably. Responsiveness is the capacity to attend promptly tocustomers willingly. Assurances are the courtesy given by staffs toclients to enhance trust and confidence. Empathy is a caringindividual attention directed to customers. In their research,Zeithaml et al. (2006) observed that the reliability of service wasan important aspect in measuring service quality.

Traditionally,customer perception on service quality was assessed after individualsconsumed the services. Phusavatand Kanchana (2008), observed that perception of quality of servicesinfluences customers repeat purchase behavior. Crosby et al., (2003),differs with this assertion that clients repeat purchase isinfluenced by the perception of quality services offered. InsteadCrosby et al., (2003), argues that it is not always that the qualityof something is perceived during the first impression. In hisstudies, Phusavat and Kanchana (2008) found that quality of servicewas the most prioritized aspects the quality service ranked 36.4percent compared to service provisions, know-how and customers focus.

Inanother study, Omotayo and Joachim (2008) found a strong relationshipbetween customer retention, loyalty and service quality. In theirstudies, they analyzed that customer retention in the serviceindustry depended on effective management of customer services. Thefindings indicated that three dimensions service quality, customersatisfaction and corporate brand were loaded differently. Servicequality and customer satisfaction had the highest measure.Maintaining existing customers is one of the most strategic meansthrough which telecommunication sector retains profitability in thehighly competitive environment retaining existing customers ischeaper than getting new customers. The studies hypothesis thatservice quality has significant influence on consumer perception inthe choice of mobile phone operators.

Servicequality and customer satisfaction

Severalstudies concur that customer satisfaction is dependent on experiencederived from a particular service encounter and as such, it is intandem with service quality. In business contexts, service qualityand customer satisfaction share similar aspects. However, customersatisfaction is a broader concept whereas service quality is ameasure of service. In addition, service quality is a component ofcustomer satisfaction that also encompasses product or service pricesand quality. Several scholars have proved that service qualityinfluences customer satisfaction to a great deal. In their study ofcustomer satisfaction and service quality in the telecommunicationindustryWang &amp Hing-Po, (2002) applied the SERVQUAL model in measuringservices quality of customer opinion for future purchase behaviors.The study revealed that service quality was significant indetermining customer satisfaction. Therefore, several studies confirmthat indeed customer service quality is key to customer satisfaction.

Theevidence provided by the literature review shows that there exists astrong relationship between service quality and customersatisfaction. According to vast studies customers in the moderntelecommunication industry are satisfied more from service quality.The study was done to assess and understand consumer perception intheir choice of the telecommunication provider in Bangladesh.Ideally, consumer perception varies among customers on the basis ofservice quality and customer satisfaction.Service quality is a component of customer satisfaction that alsoencompasses product, service prices and quality.

Severalscholars have proved that service quality influences customersatisfaction to a great deal. Maintaining existing customers is themost strategic means through which telecommunication sector retainsprofitability in the highly competitive environment retainingexisting customers is cheaper than getting new customers.Assessing customer satisfaction is not easy since it is based onindividual feelings and perception towards particular needs andwants. Customer satisfaction can be measured through quality service,speed of service, pricing, complaints and the closeness of therelationship developed with client.

Owingto the current competition among the mobile telecommunications inBangladesh, customers are very sensitive to service quality,corporate image and customer satisfaction. As such, customersatisfaction is the driving force behind the competitions, and moretelecommunications companies have invested heavily in networkquality, network extension as part of customer service quality andsatisfaction. In this way, the literature review gives a backgroundinsight of variables that influence customer perception and choicefor mobile service providers in Bangladesh. In particular, paststudies conducted in the services sector indicate that firms areinvesting intensively on service quality and customer satisfaction toinfluence customers’ choice perception in the competitive market.These studies are useful to the service providers when makingstrategic decisions for competition in the market. However, thebackground study is relevant in understanding the underlyingrelationship between customer satisfaction and customers’behavioral perception on service quality of particular serviceproviders.

  1. Methodology

Paststudies recommend for more studies in assessing variables thatinfluence customer perception their choice of mobile servicesprovider. In particular, most studies used limited sample sizes and abigger sample is preferable in arriving at a more significantanalysis. Larger sample sizes will be used in to cover a wider areain Bangladesh as well as diversifying the sample with postpaid andprepaid customers. In this way, such results would enhance easieridentification of determining attributes that promotes customersatisfaction and purchase repeat behaviors in differenttelecommunication service providers.

ResearchDesign

Theoreticalbackground research will be conducted through principles of marketingand on economic subjects, as well as direct observation on consumerbehavior and business marketing. The theoretical knowledge reviewedfrom the literature will also inform the study topic on salientvariables influencing customer satisfaction in the services sector. Moreover, in order to collect factual and unbiased data, this studywill be based on two philosophies objectivism and epistemology(Saunders, Thornhill and Lewis, 2009).

Researchphilosophies

Objectivismis based on need to collect tangible realities as regard the researchtopic variables customer satisfaction and service quality.Epistemology is based on the knowledge that factual data can only becollected through the application of scientific measurement methodsto test the hypothesis.

Researchapproach

Furthermore,the research approach is based on a deductive strategy in whichexisting theory is used to define hypothesis (Saunders,Thornhill and Lewis, 2009). In this case, the research philosophies(objectivism and epistemology) are used together with the deductiveapproach in this research as a positivist science. As such theresearch question is, ‘does service quality have any positiverelationship with customer satisfaction?’ In order to inform andtest this research question, quantitative method of data collectionwas used to confirm or reject the hypothesis or theories reviewed.

Samplingdesign

Thestudy will use a sample of 450 customers selected from differenttelecommunication operators in various parts of Bangladesh, Dhakacity from a sample of 500. For these respondents, questionnaireswith a seven likert point scale questionnaires will be used tocollect data. The self-administered questionnaires would then bedistributed to respondents based on the operators’ market share toreduce bias. As such, more questionnaires would be administered tocustomers from the operator that commands the largest share in themarket. The questionnaire would require customers give theirperceptions based on the operators services in regard to servicequality, brand image and customer satisfaction. The questionnairesvariables will then be measured against theoretical and literaturereviews (Saunders,Thornhill and Lewis, 2009).After data collection, data will be cleaned to for completeness inthe questionnaires administered and uncompleted questionnaires wouldbe discarded.

Thevariables in this research proposal are service quality, customersatisfaction and brand image. Data would be analyzed using theexploratory factor method to identify factors. Confirmatory factoranalysis will be applied to confirm the research variables (Saunders,Thornhill and Lewis, 2009).Later, chi-square and structural equation modeling will be used toanalyze the hypothesis. The structural equation method andexploratory methods would be used to test the study variables.Afterwards, a reliability test will be conducted for each variableusing the factor analysis, results analysis indicated that customersatisfaction depended on service quality and reliability of services.The chi-square analysis will indicate if service quality has asignificant effect on customer perception when selecting atelecommunication service provider. Furthermore, the chi-squareanalysis will be used to confirm if customer satisfaction isessential in determining the choice of telecommunication operator. Inthe analysis, if the variable service quality has the highestdetermining factor in customers’ perception in the choice oftelecommunication operator, then the hypothesis will be deemed true.

Annotatedreference list

Crosby,L.B., DeVito, R., &amp Pearson, J.M. (2003). Manage Your Customers’Perception of Quality. Review of Business, 24, 18-38.

Thearticle focuses on methods used to manage customer perception,integrating service quality and customer experience in assessingcustomers’ behavioral intentions in the market. The article isuseful in this study in informing the study on different aspects ofenhancing customer satisfaction.

Kotler,P. and Keller, K. L. (2009) Marketingmanagement(13thend). New Jersey:

PearsonEducation Inc., Upper Saddle River.

Thebook elaborates on marketing techniques used in businessorganizations today as part of customer satisfaction. It is thususeful in this study for the purpose of informing more on marketingstrategies used to enhance customer service quality.

Omotayo,O &amp Joachim, A.A. (2008). Customer service in the retention ofmobile phone Users in Nigeria. African Journal of BusinessManagement, 2(2), 026-031.

Inthis article, the authors’ conducted a study on customer serviceretention for mobile users in Nigeria’s telecommunication industry.The study discovered that customer retention was attributed tocustomer service quality and effective customer satisfaction.Therefore, this article is useful in this study for backgroundliterature review.

Phusavat,K. &amp Kanchana, K. (2008). Competitive priorities for serviceproviders: perspectives from Thailand. Industrial Management &ampData Systems, 108(1), 5-21.

Theauthors in this article conducted a study in Thailand in an attemptto assess organizations manager priority factors when assessing theircompetitiveness in the market. In their results, they discoveredthat, effective service quality was given the highest priority bymangers as a strategy of enhancing their market competitiveness. Assuch, the article provides an insightful perspective on the value ofservice quality in businesses as part of enhancing customersatisfaction.

SaundersMark, Thornhill Adrian and Lewis Philip. (2009). Research methods forbusiness students. UK: PearsonEducation 5th edition

Schiffman,L. G. and LazarKanuk, L. (2004) ConsumerBehavior.8thedition. New Jersey Pearson Education Inc., Upper Saddle River Titus

WangY. &amp Hing-Po L. (2002.) Service quality, customer satisfactionand behavior intentions: Evidencefrom China’s telecommunication industry, 4(6),50-60.

Theauthors in this article conducted a study in China telecommunicationindustry to assess the level of customer satisfaction and customerperception of service providers in regard to service quality. Thefindings were that most customers perceived service quality as themost determining factor in their choice of service provider. Thisarticle has significant background data that was used in makingliterature review for this study.

ZeithamlV. A., Bitner M. J., Gremler D. D. (2006) Servicesmarketing,4th edition, McGraw-Hill.